When an option is exercised, it is always to the advantage of the long position and to the disadvantage of the short position.

Question

Quizplus · Accepted Answer

When an option is exercised, the holder of the long position benefits because they have the right to buy or sell the underlying asset at the strike price. The holder of the short position, on the other hand, is obligated to fulfill the terms of the option contract and may incur losses if the market price moves against them. Therefore, exercising an option is advantageous to the long position and disadvantageous to the short position.

When an Option Is Exercised, It Is Always to the Advantage